'Dios mio gracias!': Can Colombia´s pyramids teach us anything?

For over three years pyramid and money laundering schemes brought artificial prosperity to the lives of many Colombians, allowing people to improve their quality of life beyond their wildest dreams. Then, within a few days, everything was gone, and the country was left with a social disaster on its hands. Sound familiar?

A year-and-a-half ago, back when the global economic recession had recently begun, and US electors had voted resoundingly for Barack Obama, I was making a lengthy journey from Bogota, Colombia, all the way to the Ecuadorian border town of Tulcán, where I hoped to get a Colombian working visa.

DMG´s expansion: the happy days

In Colombia at that time there was a big furore about a remarkable yet mysterious ‘holding company’ called DMG. It took its name from the initials of its founder, David Murcia Guzmán, a precocious, confident young man from a humble background. DMG, everyone agreed, was a company like no other. It could essentially be used in two ways: you could purchase a prepay card, with which you could buy any number of things- laptops, fridges, washing machines, even cosmetic surgery and holidays abroad . They were relatively costly at the point of buying them, but several months later, DMG would, miraculously, return your money. The second way of using DMG was simpler: you ‘invested’ as much money as you wanted, waited six months, by which time DMG would have apparently used your money so productively that they could now return impressive rates of interest.

Unsurprisingly, DMG had millions of Colombians in its thrall. Having started life as a curiosity in the rural backwater of Putamayo, it had expanded its tentacles across the country, attracting investors from all echelons of society, and even seducing political figures into cosy relationships. In fact, when Colombia´s President Alvaro Uribe got re-elected, it was actually a DMG subsidiary company that provided the transportation for the votes. For many Colombians, David Murcia Guzmán was little short of a saviour. The affection in which his company was held was encapsulated by its nickname - ‘Dios Mío Gracias’ (Oh my God thank you).

Anyway, as the bus arrived at the Andean border town of Ipiales, my thoughts were not on any of this. The United States had just elected its first black president, Colombia was nervously bracing itself for the fallout from the credit crunch, and I had a visa to sort out. But as the taxi weaved its way through the town, we passed a crowd of people arguing outside a building. Remembering what I had heard about DMG, I asked the driver what was going on. He explained that it was actually another ‘investment company’, known as DRFE. He told me he was worried about the effect companies like DRFE and DMG were having on the local society (many peasants had actually sold off their land so they could invest in them, and some people had ceased working altogether) and he noted that something new was afoot. DRFE had suddenly changed the rules, now insisting that people had to reinvest their profits back into the company, on the basis that ’you have to feed the cow if you want it to keep giving you milk’.

End of the boom

Much as I wanted to keep talking about these strange goings on, the taxi arrived at the border, and I bade the driver goodbye. A few days later, however, as I waited in Ecuador for my visa application, I heard some startling news. DRFE (which I discovered, actually stood for ‘fast easy money in cash’), had gone bust, and the owners had fled. Towns across southern Colombia were subsumed by chaos, as enraged investors desperately ransacked the deserted DRFE offices. Suddenly, Alvaro Uribe, by far the most popular president in Colombia´s modern history, was staring down the barrel of a social catastrophe. Not only that, he now had to deal with a potentially more explosive timebomb- the ever-reliable, ever functioning, yet ever so dubious DMG. Uribe didn´t hesitate, and within a matter of days, David Murcia Guzmán had been captured in Panama and whisked back to Colombia in handcuffs. DMG´s investors protested, enraged that the company in which they had invested their hopes and dreams had been treated in this way.

By the time I crossed back into Colombia two weeks later, DMG was no more, and its investors had no guarantee of ever seeing their savings again. Following a few years of one of the most remarkable bubbles of euphoria and unbridled consumption, towns across southern Colombia had become overwhelmed by despair, rage and misery. Back in Bogotá, many of my own friends had lost money from DMG, and everybody had something to say about it. Most DMG investors blamed the President for intervening, and even threatened to bring him down. Others blamed the country’s conservative banking system for excluding poorer people, and driving them into the arms of DMG. Very few people actually blamed DMG directly; after all, it never screwed anyone over, right?

Just a Colombian tale?

Eighteen months later Colombia has moved on. David Murcia Guzmán is in a US jail, accused of money laundering. For a few glorious years, his company and others like it brought prosperity and happiness to millions of Colombians, allowing them to live lifestyles that had previously been unthinkable. Ultimately, though, the happiness he brought was illusory, unsustainable and almost certainly immoral. In their wake, DMG and DRFE left behind a trail of human misery, particularly in south Colombia, which is still recovering. Of course, this is a very Colombian tale, and anyone who has read the works of Gabriel García Márquez will find some remarkable similarities with the mythical town of Macondo. But it´s hard, when we consider the global recession, as well as the unsustainable ecological foundations of the world economy, both of which have been cited as evidence of pyramid-style unsustainability, to avoid seeing Colombia´s pyramid scheme crisis as a wider allegory from which we all might learn something.